FIVE DAYS; A Big Deal Overshadowed by the Politics of Ports

By Mark A. Stein

Published: March 11, 2006

MULTIBILLION-DOLLAR mergers of companies with household names are not often swept aside by other news just days after they are announced, but by yesterday it was almost easy to forget that the week began with AT&T's bid for BellSouth.

The week ended with a political showdown over -- of all things -- a company that runs container ports. In between was a showdown of another sort, among the former executives of Enron, who faced off in a federal courtroom in Houston.

PORTS IN A STORM -- The debate over whether a company controlled by the government of Dubai should operate several major seaports in the United States grew into a showdown between President Bush, who supported Dubai as a matter of free trade, and the Republican-controlled Congress, which opposed it as a matter of national security.

Many members of Congress, including Democrats, threatened to forbid the company, DP World, to acquire the rights to run the ports. The matter arose when DP World bought the Peninsular & Oriental Steam Navigation Company of Britain, which has run the United States terminals for years.

Bowing to the political opposition, DP World said it would transfer the management of the American properties to an American-owned company.

The Treasury Department says that it is seeking more details about the Dubai company's new plans and that a 45-day review of the ports deal that was under way had not been ended by the announcement. The review is scheduled to be completed in mid-April.

THAT MERGER -- Ending months of speculation, AT&T offered to acquire BellSouth for $67 billion, taking the offensive against low-cost rivals in the free-for-all for phone, wireless and television customers.

The move illustrates how companies like AT&T are trying to turn themselves into one-stop shops for voice service, mobile phones, Internet access and even television programming to better compete with cable providers and technology companies entering the phone business.

With $120 billion in sales, 317,000 workers and 71 million local phone customers in 22 states, the combined companies would recreate a big chunk of the former AT&T monopoly that was broken up a generation ago.

The deal still must pass muster with regulators and will probably face close scrutiny from consumer groups, which argue the merger would give AT&T too much power in the market and lead to higher prices.

THE STAR WITNESS -- Six weeks into the trial of Enron's former chief executives, Jeffrey K. Skilling and Kenneth L. Lay, the company's third-highest officer, the former chief financial officer, Andrew S. Fastow, took the witness stand and wasted no time in pointing a finger at his former bosses.

Mr. Fastow testified that both Mr. Skilling and Mr. Lay knew that Enron was verging on collapse even as they assured employees and investors that it was prospering. He also said that Mr. Skilling knew Enron used off-the-books partnerships to manipulate its earnings, and that Mr. Lay, Mr. Skilling and the board of Enron all knew he would make millions of dollars by running the partnerships.

Mr. Fastow is scheduled to return to the witness stand on Monday, when he will be cross-examined by Mr. Lay's lawyer, Michael Ramsey.

PAY TO BE PLAYED -- New York's attorney general, Eliot Spitzer, filed a civil lawsuit against Entercom Communications, the nation's fifth-largest chain of radio stations, expanding his effort to curb the practice of selling radio time to record companies to promote their music.

In the lawsuit, filed in Manhattan, Mr. Spitzer said programming executives at Entercom, based in Bala Cynwyd, Pa., accepted gifts, trips and cash in exchange for ordering some of the company's 105 stations to play certain songs, sometimes as often as 100 times a week. Entercom officials denied the allegations.

Two record companies, Sony BMG and Warner Music, have agreed to pay millions to end reviews of whether they bribed programming executives to play songs.

SECURITY SLIP -- Citigroup halted all transactions on bank cards used in Britain, Canada and Russia after detecting an unspecified number of fraudulent cash withdrawals from automated teller machines last month.

The move was the latest sign of a card system breach that has prompted other big banks, including Bank of America, Wells Fargo and Washington Mutual, to reissue thousands of debit cards. The banks are not sure how thieves obtained the account numbers and PIN's used in the scam.

All of the banks said they would provide new cards to customers whose accounts were compromised.

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